Facebook<\/p>\n
Tweet<\/p>\n
<\/p>\n Email Link<\/p>\n \n The July jobs report<\/a>, and the downward revisions that came along with it, confirmed what other data, surveys and economists had been cautioning for some months now: The US labor market has been growing soft and stagnant<\/a>.\n <\/p>\n \n The realization, however, hit like a ton of bricks and triggered some extracurricular drama<\/a> in the process.\n <\/p>\n \n The month\u2019s 73,000 estimated jobs added were well below the 115,000 net gain expected and half the size of June\u2019s preliminary tally. As for May and June\u2019s gains, those were drastically slashed by a combined quarter of a million jobs.\n <\/p>\n \n Following those revisions, the three-month average was just 35,000 jobs added. Outside of the massive job losses during the onset of the pandemic, that\u2019s the slowest pace of job creation seen in nearly 15 years, Bureau of Labor Statistics data shows.\n <\/p>\n \n When all was said and done, President Donald Trump fired BLS Commissioner Erika McEntarfer<\/a>, claiming, without evidence, that she manipulated the numbers for \u201cpolitical purposes.\u201d (Revisions are a \u201cfeature, not a bug\u201d of economic data, and there are explanations for what happened in May and June \u2014 more on that below).\n <\/p>\n \n Friday\u2019s jobs report for August is expected to provide some additional and much-needed clarity on the health of the nation\u2019s labor market, the bedrock for the US consumer and economy.\n <\/p>\n \n A consensus of economists\u2019 estimates put August\u2019s expected payroll gains at 80,000, according to FactSet.\n <\/p>\n \n FactSet estimates are also showing that the unemployment rate is expected to hold steady at 4.2%.\n <\/p>\n \n \u201cYou\u2019re definitely seeing a slowing in the labor market, a pretty marked slowing,\u201d Dan North, Allianz Trade\u2019s senior economist for North America, told CNN in an interview.\n <\/p>\n \n Through July, the US economy has added about 85,300 jobs per month. For the comparable periods in 2024, 2023 and 2022, that tally was roughly 153,300, 240,400, and 466,850, respectively.\n <\/p>\n \n Slower job growth has long been expected. The nation\u2019s labor market was coming down from pandemic-era hiring highs and supposed to be settling into a new normal.\n <\/p>\n \n However, it remains to be seen whether the current low-hire, low-fire environment that has left workers and jobseekers with few opportunities is a concerning stalling-out or something more structural entirely.\n <\/p>\n \n \u201cThe slight uptick in July\u2019s still-low unemployment rate suggests that labor supply has slowed nearly in tandem with labor demand, keeping the overall market \u2014 as [Federal Reserve Chair Jerome] Powell described in his Jackson Hole speech \u2014 in a \u2018curious kind of balance,\u2019<\/a>\u201d Seema Shah, chief global strategist at Principal Asset Management, wrote in a Wednesday note.\n <\/p>\n \n \u201cAs such, the disappointing payroll figures may not signal outright labor market deterioration but rather reflect an economy that requires fewer new jobs to maintain stable employment levels,\u201d she added.\n <\/p>\n \n Labor supply has been shrinking in part because of an aging workforce as well as reduced immigration flows. At the same time, the Trump administration\u2019s whipsaw tariff policy has injected substantial uncertainty into the economy, paralyzing some businesses\u2019 hiring plans in the process.\n <\/p>\n \n \u201cEmployers have been tightening their purse strings to cope with uncertainty in the economic outlook,\u201d Elizabeth Renter, senior economist at NerdWallet, wrote Wednesday. \u201cThis means holding back on hiring they might otherwise do. Fortunately, thus far, it\u2019s also meant holding back on layoffs.\u201d\n <\/p>\n \n The Labor Department\u2019s weekly jobless claims report is the highest-frequency federal data that\u2019s the closest proxy for layoff activity.\n <\/p>\n \n First-time claims for unemployment insurance have remained in a narrow range since mid-June and are still running below where they were at last year, painting a \u201creasonably optimistic picture\u201d of the labor market, Abiel Reinhart, JPMorgan economist, wrote last week.\n <\/p>\n \n The continuing claims data, however, have continued to bump up against nearly four-year highs, indicating that it\u2019s not been easy for unemployed people to find work.\n <\/p>\n \n That was reinforced earlier this week with the latest Job Openings and Labor Turnover Survey data. At the end of July, for the first time in more than four years, there were fewer job openings than there were job seekers<\/a>, BLS data showed.\n <\/p>\n \n At the same time, the July JOLTS report showed that hires, quits and layoffs didn\u2019t budge much at all.\n <\/p>\n \n Still, there are some indications that a pickup in layoff activity could come in the months ahead.\n <\/p>\n \n In August, US-based employers announced plans for 85,979 layoffs, an increase from the 62,075 announced in July, according to Challenger, Gray & Christmas\u2019 latest job cut tracking report released Thursday.\n <\/p>\n \n By Challenger\u2019s count, it was the worst August since the Great Recession for layoff announcements.\n <\/p>\n \n \u201cAfter the impact of [Department of Government Efficiency cuts] on the federal government, employers are citing economic and market factors as the driver of layoffs,\u201d Andrew Challenger, senior vice president of Challenger, Gray & Christmas, wrote in a statement. \u201cWe\u2019ve also seen a spike in cuts due to operation or store closings and bankruptcies this year compared to last.\u201d\n <\/p>\n \n Revisions: <\/strong>Economic data is frequently revised \u2014 especially as more comprehensive information becomes readily available \u2014 to provide a clearer, more accurate picture of the dynamics in play.\n <\/p>\n \n And, in times of economic transitions<\/a>, revisions are usually more outsized in one way or other, William Beach, the BLS commissioner during Trump\u2019s first term, told CNN recently.\n <\/p>\n \n \u201cWe have seen this pattern before of fairly large downward revisions when the economy is slowing, fairly large upward revisions when the economy is growing again,\u201d he said.\n <\/p>\n \n One part of the substantial downward revisions in May and June are likely due to small businesses responding late to the survey \u201cbecause they\u2019re just too busy trying to stay alive,\u201d he said.\n <\/p>\n \n A larger part of the revision was because of seasonal adjustment factors that had to be changed because of a larger-than-typical drop-off in state and local education hiring, he added.\n <\/p>\n \n As for July, there is a weak correlation between a current month\u2019s revision and prior months, suggesting that another downward revision is likely in store, wrote Dean Baker, senior economist at the Center for Economic and Policy Research.\n <\/p>\n \n Narrow job growth: <\/strong>The US labor market has become increasingly reliant upon a dwindling number of industries to drive job growth. In July, the nation\u2019s jobs gains were entirely driven by the health care and social assistance industry.\n <\/p>\n \n That\u2019s expected to be the case in August, Greg Daco, chief economist at EY-Parthenon, wrote in a note earlier this week.\n <\/p>\n \n \u201cMost other sectors (outside health care and, to a lesser extent, leisure and hospitality) are likely to see muted or even negative employment trends,\u201d Daco wrote. \u201cSpecifically, we anticipate notable payroll declines in professional and business services as well as retail trade and manufacturing, with little to no change in information and transportation employment.\u201d\n <\/p>\n \n Black unemployment: <\/strong>During the past two months, the unemployment rate for Black workers has risen considerably higher, jumping from 6% to 6.8% in June and then to 7.2% in July \u2014 a nearly four-year high.\n <\/p>\n \n Demographic data in the household survey (one of two that compose the monthly jobs report) can be highly volatile because of smaller sample sizes; however, if it moves higher in August, \u201cit will mean we have a serious deterioration in the labor market situation for Black workers in just a half year,\u201d CEPR\u2019s Baker noted.\n <\/p>\n \n A rise in the Black unemployment rate<\/a> is often considered the \u201ccanary in the coal mine,\u201d<\/a> foretelling a broader-scale job market slowdown.\n <\/p>\n \n Wage growth: <\/strong>Annual growth in average hourly earnings is expected to slow to 3.7% from 3.9% in August, according to FactSet estimates.\n <\/p>\n \n However, a cooling in workers\u2019 pay gains is coming at a time when inflation is starting to heat back up, putting an additional damper on already moderating consumer spending.\n <\/p>\n \n \u201cEmployers\u2019 continued focus on wage containment amid a slowing economy may lead to a further deceleration in wage growth toward 3.5% by the fall,\u201d Daco said.\n <\/p>\n \n Influence on Fed cuts: <\/strong>The market believes that a September rate cut is practically a sure thing<\/a>. The CME Group\u2019s FedWatch Tool<\/a> on Wednesday showed a 96.6% probability that the Fed will reduce its benchmark rate by a quarter point at its September 16-17 meeting.\n <\/p>\n \n However, a hotter-than-expected payroll reading may cause some central bankers to keep on pause, said Joe Brusuelas, RSM US chief economist.\n <\/p>\n \n \u201cAnything below 50,000 should lean toward a [quarter] point rate cut at the Fed meeting; anything at or above 100,000 will most likely support waiting until the fall or early winter to cut rates,\u201d Brusuelas wrote Wednesday. \u201cThe gray area in between will then cause Fed members to look more closely at the September inflation data in the Consumer Price Index and Personal Consumption Expenditures index.\u201d\n <\/p>\n","protected":false},"excerpt":{"rendered":"Facebook Tweet Email Link The July jobs report, and the downward revisions that came along with it, confirmed…\n","protected":false},"author":3,"featured_media":199687,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[64,79,67,132,68],"class_list":{"0":"post-199686","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-united-states","11":"tag-unitedstates","12":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115146373362890544","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/199686","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=199686"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/199686\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/199687"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=199686"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=199686"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=199686"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n <\/a><\/p>\n